Universal Technical Institute, Inc. UTI has been making strides in the market. After trading around $25 per share for the past four sessions, shares of the leading provider of workforce solutions in transportation, skilled trades and healthcare education programs reached a new 52-week high of $26.43 on Wednesday. However, the stock received a slight pullback, closing at $26.04, reflecting a modest 0.4% gain from the previous day’s close of $25.95.

This milestone comes amid stellar fourth-quarter fiscal 2024 results, fueling a 30.9% jump in the stock price since the earnings announcement. The company exceeded expectations, with quarterly revenues rising 15.3% from the prior-year quarter to $196.4 million. This growth was driven by a 10.6% year-over-year rally in student starts at the UTI and Concorde segments. The company expects fiscal 2025 to deliver continued strong growth.

The stock has skyrocketed 107.9% year to date (YTD), significantly outpacing 5.3% growth of the Zacks Schools industry. This remarkable performance has drawn the attention of investors. Over the same period, the broader Zacks Consumer Discretionary sector has risen 14.1%, whereas the S&P 500 rallied 26%.

The company’s strong performance was largely driven by its commitment to three core expansion initiatives — increasing the capacity of current programs on campuses, expanding existing programs to more campus locations and launching in-demand programs. In addition, Universal Technical has adjusted its marketing and admissions investments to accelerate lead generation and improve the conversion of inquiries.

Notably, the UTI stock has outperformed some other players YTD, including Stride, Inc. LRN, Adtalem Global Education Inc. ATGE and Strategic Education, Inc. STRA. During the said time frame, LRN, ATGE and STRA shares have gained 80.3%, 53.9% and 7.7%, respectively.

Universal Technical’s YTD Share Performance

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Factors Acting in Favor of UTI

Advancing the North Star Strategy: Five years ago, Universal Technical launched the first phase of the North Star Strategy to address the country’s skilled worker shortage. Since then, it has made significant progress, nearly tripling campus locations, doubling the student base, doubling revenues and increasing profitability more than five times.

The company completed the first phase of the North Star Strategy in fiscal 2024, achieving strong results across key metrics. Universal Technical’s strong performance has been supported by efforts to enhance program offerings in critical industries while executing its growth, diversification and optimization strategy. The focus on optimizing the workforce and facilities is improving operational efficiency, and driving margin expansion. As it moves into the second phase of the strategy, the company expects fiscal 2025 to deliver significant growth.

In September, Universal Technical increased its revolving credit facility by $25 million, bringing the total to $125 million, with an added accordion feature. This provides greater financial flexibility as the company progresses into Phase Two of the North Star Strategy in fiscal 2025. These initiatives are expected to drive the company’s target of 10% compound annual revenue growth from 2024 to 2029, with the adjusted EBITDA margin reaching 20% by fiscal 2029.

New Campuses & Program Launches: The company is focusing on expanding its presence by opening campuses and adding programs to its existing locations. These efforts are part of its ongoing North Star strategy to meet the increasing demand for skilled workers across various industries.

Starting in fiscal 2025, Universal Technical plans to introduce a minimum of six programs each year across its Concorde and UTI campuses. Additionally, the company aims to open at least two campuses annually beginning in fiscal 2026. The first three campuses planned for 2026 include a Concorde Heartland campus in Fort Myers, FL, a Skilled Trade and Aviation campus in Greenfield City, and an optimized UTI campus in a new state.

As Phase Two of the North Star strategy begins in fiscal 2025, the company will initiate the first wave of growth investments. These investments will support the launch of programs and campuses. The company expects to incur $8 million in growth investments in fiscal 2025 to further advance the strategy.

Solid Outlook for FY25: Owing to the company's strong execution in fiscal 2024, UTI is well-positioned to drive growth with its detailed organic strategy. This consistent performance supports the outlook for continued progress in the fiscal 2025.

For fiscal 2025, Universal Technical anticipates revenues of $800-$815 million, suggesting 10% year-over-year growth at the mid-point. This is driven by an increase in the average number of full-time active students across both divisions, with new student starts expected to be 28,000-29,000.

Adjusted EBITDA for fiscal 2025 is forecast between $120 million and $124 million, indicating a 19% year-over-year increase at the mid-point.

UTI Stock’s Estimate Movement Trends Upward

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The Zacks Consensus Estimate for UTI’s fiscal 2025 earnings has trended upward in the past seven days. The estimated figure indicates growth of 29.3% from a year ago. The consensus estimate for fiscal 2026 earnings has moved up over said time frame, implying 17.5% year-over-year growth.

UTI’s Technical & Valuation Insights

Technical indicators suggest continued strong performance for UTI. As of Tuesday, the Universal Technical stock was trading above its 50-day moving average of $17.93 and its 200-day moving average of $16.35. The technical strength underscores positive market sentiment and confidence in UTI’s financial health and prospects.

UTI Stock Trades Above 50 & 200-Day Moving Averages

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As UTI has outperformed the industry in the past three months, its valuation looks a bit stretched compared with the industry average. UTI is currently valued at a premium compared with its industry on a forward 12-month P/E basis. The company’s forward 12-month price-to-earnings ratio stands at 26.24X, higher than the industry’s average of 18.43X.

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How to Play UTI Stock?

Universal Technical is well-positioned for continued growth as it advances into the second phase of its North Star Strategy. With a strong focus on expanding its campus footprint, enhancing program offerings and optimizing its operations, the company is set to drive significant results in fiscal 2025. The commitment to addressing the skilled worker shortage through investments and campus expansions, combined with its increased financial flexibility, supports Universal Technical’s long-term growth outlook.

Given its continued momentum and promising outlook, this Zacks Rank #1 (Strong Buy) company deserves a closer look. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Strategic Education Inc. (STRA) : Free Stock Analysis Report

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